The Commonwealth Bank may face a class action from investors, following revelations the board failed to disclose a money laundering investigation for over two years, which triggered a $5.5 billion collapse in the bank’s share price when the regulator launched its case.
Class action lawyers are circling the CBA saga as more information emerges about what the executives and board knew and when.
Treasurer Scott Morrison met with CBA chairman Catherine Livingstone on Tuesday and the Treasurer has taken advice from Australian Securities and Investments Commission chairman Greg Medcraft who is also investigating taking action over CBA’s disclosure.
The threat of a major shareholder class action poses a further headache for the CBA which is already facing a multi-billion dollar penalty, on top of the board’s self-imposed response including a $40 million technology upgrade, $85 million to strengthen the bank’s “know-your-customer” processes and cutting executives short-term bonuses.
“It should not have taken the issuing of court proceedings by AUSTRAC and media reporting of that, for the bank to own up to such serious and troubling allegations by one of its regulators,” class action law firm Phi Finney McDonald said.